Blogs & Comment

Hits, misses, from the throne

The throne speech delivered earlier this evening by Governor General Michaelle Jean was of course not just an exercise in political discourse, but a political act in itself.
These speeches are typically the last thing everyday people would bother paying attention to, and for years even the press gallery has been hard-put to get excited about them, but tonights was different. Given that the Conservative government is a minority one functioning without a real coalition, the speech provided the opposition Liberals with the first opportunity for a non-confidence motion in the new Parliament. With the current disarray of the Liberal party, that seems a pretty long shot, so the only real question tonight was how deep the Conservatives would dare to go to rub Liberal leader Stephane Dions face in policies he doesnt want to stomach, but probably will.
If all this seems cold political calculation, it clearly was. In tonights speech the one element that will no doubt stick in Dions craw is the admission by the government that Canada is not only not anywhere near meeting its environmental commitments under the Kyoto Protocol, but that it is not going to meet its commitments going forward. This is an important political gesture, and will make the Liberals rethink how deep their green bona fides run.
But there was more in the throne speech than a carbon gauntlet thrown at the feet of a struggling Liberal leader. It also included commitments to a bunch of economic and fiscal initiatives, some of them good and some of them bad for business.
The North: The speech made a big deal about unlocking the potential of Canadas Arctic and defending the nations sovereignty there. The commitments (to a permanent research station and to an increased military presence) were largely symbolic and smushy, except for a much-needed move to improve native housing. But what about committing to building a highway or 10 in the territories? Last I heard, Nunavut didn’t even have one…
Maybe that would be covered off by the Tory commitment to:
Infrastructure: The govt is going to announce the Building Canada Plan, which Jean said will be all about investing in our transport and trade hubs, including the WindsorDetroit corridor and the Atlantic and Pacific gateways. This is all good. It would be nice, though, if the government further committed to innovative ways to finance such projects, including more participation by private market players (a la public-private partnerships). Might happen.
Trade: There was some more boasting about the trade agreement reached last year with the European Free Trade Association (Go Licehtenstein!), and a commitment to open up new markets for Canadian innovators.
Well, OK, fair enough. But a few paragraphs down the Tories had this to say about
Agriculture: When I heard these bits my first response was Ugh. First, the government reiterated its commitment to developing the biofuels industry–an area in which it’s still hard to discern where sound energy policy ends and crass subsidization of agriculture for political reasons begins. And the Tories also felt it necessary to crow about their strong support for Canadas supply-managed system.
With this, the government has basically said it continues to support a system of dairy, poultry and egg marketing that regularly gouges the Canadian consumer. Almost as bad, supply managed agriculture is a major point of contention with our trade partners, and undermines Canadas bargaining position at multilateral trade talks. How can we say we want unfettered access to other markets when we continue to condone government-protected cartels for a select few farmers?
Interprovincial barriers: This was one big bright spot in the Speech. The government committed to strengthen the economic union and will consider how to use the federal trade and commerce power to make [it] work better for Canadians.
This raises the possibility that the feds will implement legislation to override the interprovincial absurdities restricting the movement of goods, services and people around Canada. If they can pull it off, more power to them. My magazine started out about 80 years ago with a call for the elimination of barriers to commerce within Canada. In other words, this issue has been around a long time, and it will take real political courage for the Conservatives to tackle it effectively. The good news is that political courage seems a thing that Finance Minister Jim Flaherty has no shortage of. (See “Income Trusts.”)
The mention of fed powers in commerce and trade could also be a hint that Ottawa may act on establishing a single national securities regulator–maybe after Flahertys special panel (looking into the matter for the umpteenth time) makes its report? That might get the recalcitrant provinces attention, at least.
Finally, the good news/bad news thing continues with…
Fiscal matters, including taxes: The good news is that the Speech committed to a long-term plan of broad-based tax relief for individuals, businesses and families, details of which would be delivered by Flaherty in his upcoming fall fiscal and economic update. Bravo. It also said the government would move to fix up the governance of the Employment Insurance Accounthigh time, again, to tackle this issue, which in its current form (surpluses get plowed into general government revenue) is little more than a tax on productivity. The Working Income Tax Benefit and registered disability savings plan commitmentsfine.
The one really bad fiscal decision the Conservatives have made is to honour their previous commitment to lower the GST by another percentage point. The trend in smart states throughout the world has been to INCREASE consumption taxes, not lower them, and if real broad-based income tax relief is not part of Flahertys fiscal update, then lowering of the GST will be doubly questionable. Because what a smart governmentof any political stripeshould do is LOWER income taxes and RAISE the VAT. Simple as that.
Didnt anyone in Ottawa get the memo?
You know, the one that summarizes accepted wisdom on taxes?
I guess not. Oh, well, lowering the GST will no doubt be a slam-dunk at the polls for the Conservatives. And getting re-elected (or staying in power over a Parliament that doesnt have the guts to force an election) will allow the Tories to implement their other commitments, many of which would be welcome.
And didnt I say this throne speech was a political act?